What to Know in Washington: Debt Meeting Delayed for Aide Talks

President Joe Biden and Speaker Kevin McCarthy postponed their meeting on the debt ceiling set for today as their aides continue negotiations toward avoiding a catastrophic US default.

The delay signals that staff-level talks on energy permitting reform and government spending have yielded progress, according to people familiar with the situation. McCarthy (R-Calif.) said Biden planned to meet with him and other congressional leaders next week, though neither side specified a date.

The speaker told reporters at the Capitol that the leaders agreed it would be “more productive” for staff to proceed with their discussions. Senate Majority Leader Chuck Schumer (D-N.Y.) also said he believed talks “are moving along.”

Source: Bloomberg

White House congressional liaison Louisa Terrell met behind closed doors with McCarthy chief of staff Dan Meyer and other aides for more than two hours yesterday afternoon.

Yet even as both sides touted progress in private talks, McCarthy — who must pacify restive conservatives who demand deep budget cuts — sharply criticized Democrats.

“President Biden and Senator Schumer are stuck on ‘no.’ They have no plan, no proposed savings and no clue,” McCarthy told reporters as news of the meeting delay broke. “Apparently, President Biden doesn’t want to deal. He wants to default.”

An agreement on spending could clear the way for a deal. The spending discussions are also focusing on clawing back unspent Covid-19 funds and capping spending in the upcoming federal fiscal year beginning Oct. 1, said Rep. Garret Graves (R-La.),a key adviser to McCarthy in the negotiations. The White House wants a short-term caps deal, while Republicans want to cap discretionary spending for 10 years, he added. Read the full story from Justin Sink, Erik Wasson and Billy House.

The Treasury Department has warned that the US could default on payments as soon as June 1 if lawmakers are unable to strike an agreement to raise the debt ceiling. Doing so would reverberate throughout the economy, economists have warned, projecting increased credit costs and unemployment.

In an interview with Bloomberg Television, Treasury Secretary Janet Yellen said the only good outcome in the current debt standoff is for Congress to raise the ceiling. “If Congress fails to do that, it really impairs our credit rating,” she added. Christopher Condon recaps her remarks from the sidelines of a G-7 gathering of finance officials in Niigata, Japan.

Streamlining federal permitting for energy and infrastructure projects could end up tied to a deal between Capitol Hill and the White House on raising the debt ceiling, House Republicans close to McCarthy say. Read more

BIDEN’S AGENDA

• Biden holds a meeting with President Pedro Sanchez of Spain at 2 p.m. at the White House
• White House Press Secretary Karine Jean-Pierre and Infrastructure Implementation Coordinator Mitch Landrieu hold a 1 p.m. briefing

CONGRESS’ SCHEDULE

• The House and Senate return Monday

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To contact the reporters on this story: Brandon Lee in Washington at blee@bgov.com; Michaela Ross in Washington at mross@bgov.com

To contact the editor responsible for this story: Kayla Sharpe at ksharpe@bloombergindustry.com